Ethereum is an application development platform based on decentralized blockchain technology. Sounds a lot like Bitcoin, doesn’t it? Most people have heard of Bitcoin, but when you ask them about other cryptocurrencies like Ethereum, they have no idea what’s going on.
Hi everyone, this is Alex! I have been studying bitcoin and other cryptocurrencies for five years. I can confidently say that while bitcoin deservedly rattles around the world, other cryptocurrencies, especially Ethereum, are undeservedly unknown. This article will tell you all about Ethereum: what it is when created and how it is structured.
It all started in 2011 when a young developer Vitaly Buterin became interested in blockchain technology and the Bitcoin cryptocurrency. A couple of years later, in 2014, fully convinced of the practical usefulness of blockchain, Vitaly creates the technical documentation for the product that is now known worldwide as Ethereum.
In 2017 and early 2018, the price of ETH grew almost exponentially. This was because many projects launched on the Ethereum network at that time through initial coin offerings (ICOs). All of these projects had their coins. As an investor, you could participate in these projects by sending them fiat money in exchange for ETH tokens. ICOs were extremely popular in 2017 and 2018, and the price of cryptocurrency reached unprecedented heights due to high demand.
For the uninitiated, the phrases cryptocurrencies and blockchain are automatically associated with the most popular blockchain-based development, the Bitcoin cryptocurrency. But blockchain is not Bitcoin, just as Ethereum has little in common with Bitcoin and has completely different goals.
The primary purpose of Ethereum is not only for digital asset transactions but also to support the operation of the Ethereum blockchain. It is important to note that this network underpins many decentralized applications, referred to by one common term: DApps.
How Does Ethereum Work?
Ethereum has no limit on the number of coins that can be in circulation, unlike Bitcoin. Moreover, the Ethereum blockchain is more functional than the BTC blockchain. For example, the Bitcoin blockchain is used only for buying, selling, and trading cryptocurrencies.
When creating Ethereum, developers’ difficulties when working on a pure blockchain were taken into account. Any centralized systems and applications can be decentralized using Ethereum. The simplest examples are loans and loans, the voting process, and intermediary services. No one, not even the creator of the application, can make changes to completed actions. This rules out any corruption and fraud.
Ethereum Smart Contracts
Ethereum’s blockchain supports Smart Contracts. It is a pre-set irreversible action that will be automatically executed when a specific condition is reached. A Smart Contract can be described as an automatic and autonomous program that eliminates outside interference once launched into the network.
Smart Contracts can be called the ideal system of contractual relations between people. Moreover, this technology is limitless in its development in everyday life.
How to Mine Ethereum?
You can get Ethereum in two ways:
- Buying for other cryptocurrencies or fiat.
- Mining Ethereum.
In the case of the first option, everything is clear: at memorable exchanges or Internet exchanges, everyone can buy as much Ether as he needs at the current rate.
If you have a powerful video card installed on your computer, you have an excellent opportunity to mine or get Ether using the processing power of your video card. The process of mining is simple and not much different from mining other cryptocurrencies.
Ethereum vs. Bitcoin
At first glance, Bitcoin and Ethereum seem identical. But although both cryptos are based on blockchain, they do not have much in common.
Bitcoin’s primary practical purpose is an anonymous, decentralized means of making payment transactions that are irreversible and open to all participants in the network. The bitcoin cryptocurrency blockchain is used only to record information about all transactions ever made on the web and current ownership.
The Ethereum blockchain records information about program codes and ensures that all decentralized applications developed on Ethereum work. The primary function of ETH is to remember intelligent contracts in such a way that they cannot be counterfeited. You could say that Ethereum was created around an entirely different idea.
Another interesting fact is that the prize for mining BTC is halved every four years – Bitcoin halving. Meanwhile, Ethereum rewards you for working on the Ethash algorithm by regularly paying 5 ETH per block, and that should not change.
Ethereum also has an exciting and consistent way of estimating costs across all transactions. Without describing the technical details, it can be determined that the amount of commission charged depends on the complexity of the transaction. Meanwhile, transaction costs for Bitcoin are fixed. Therefore, the profitability of low-value payments made with BTC has declined in recent months.
Ethereum in 2021
ETH, like the rest of the market, depends on Bitcoin’s price movement. So when Bitcoin starts to rise, ETH can also rely on it. While Bitcoin is leading and moving up, ETH is usually doing the same. Ether will increase its value, expressed in U.S. dollars, thanks to a general rise in cryptocurrency prices. The ETH/BTC exchange rate is likely to decline.
Nevertheless, Ethereum is one of the leading contenders for significant growth. Money usually flows from Bitcoin-profits to large-cap altcoins and then moves to lesser-known and smaller projects. The blockchain platform on which most developers develop real-world applications will be the platform with the broadest distribution. Ethereum not only has a massive advantage in this area, but it is increasing every day.
As of January 25, 2021, the price set a new record of $1476.06. Several factors led to the jump. Again, Bitcoin’s uptrend has supported the entire cryptocurrency market. According to experts, the value of Ethereum could soar to $3,000 in 2021.
Is Investing in Ethereum a Good Investment?
Ethereum and Ethereum 2.0 have been inextricably linked since December 2020. On December 1, 2020, Ethereum underwent a revolutionary transformation and is now known as Ethereum 2.0. To put it another way, Ethereum 2.0’s main difference is its scalability. Ethereum 2.0 uses a sharding technique to do this. This allows it to accelerate from an average of 30 to 100,000 transactions per second. This dramatically expands Ethereum’s capabilities.
The Artex Global team agrees with these thoughts, and hopefully, this article has helped prove it. We always promote interest in the field of cryptocurrencies and blockchain, so if you missed our other articles, such as comparing cryptocurrency exchanges in New Zealand or what decentralized systems are, we advise you to check them out.
I have been studying cryptocurrency for over 5 years. I have accounts in every exchange and I test everything on myself.
I want this market to be more understandable for everyone.